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Established Light Rail Systems Spur New Urban Multifamily Development Possibilities

With the apartment industry’s migration in recent years to downtown urban centers, Texas’ budding light rail agencies find themselves in new territory and developers are hopping aboard for the ride.

A build-it-and-they-will-come mentality along transit rail lines is creating opportunities for multifamily developers to capture a younger generation of renter who’s more focused on short commutes. And the trend appears to be growing in other parts of the state, which is a relative newcomer to moving people by rail in modern times.

Since Dallas Area Rapid Transit’s arrival in 1996, Texas has joined the legion of states east of the Mississippi River that traditionally provide rail transportation to high-density areas. An aggressive DART expansion will double its line to 90 miles by 2013, and Houston and Austin are acquiring light rail lines as fast as they can. Last year the Denton A-Train made its debut north of Dallas.

Light rail, says DART Executive Vice President/Growth and Regional Development Tim McKay, just makes mixed-use properties more attractive. An established light rail system is a huge piece of the puzzle already in place for a developer to justify building a property where residents can shop, dine or work within a short distance from home.

“A couple of things are starting to become popular,” McKay said. “You enter into an agreement with a developer where (light rail) brings to the table a piece of property. The developer brings a master plan for a development, and the city throws in tax breaks. Next thing you know, you have a viable project.”

DART has seen a flurry of activity from developers enticed by an established system that recorded 22.3 million trips in 2011 over 700 square miles and 31 North Texas counties. The agency is evaluating two proposals – one near Mockingbird Station, a high-density development that was the first of its kind in the region, and another across from the downtown headquarters – that have been initiated by developers who want to leverage DART. Existing stations on other parts of the network are getting attention as well.

Mockingbird Station, developed about the time that DART launched Kenneth Hughes, spotlights how developers embrace light rail. Once the site of the old Western Electric building, Mockingbird Station complements one of DART’s first stations and connects the Orange, Red and Blue lines. It’s not far from Southern Methodist University and bustles with activity day and night.

The 10-acre urban village features residential lofts, 22 retail shops, about a dozen restaurants and 21 businesses, from law firms to banks to ad agencies. Seven stories of living space offer spacious one-bedroom studios, one- and two-bedroom lofts, and lavish penthouses covering 211 floor plans.

An average of 3,086 weekday riders board trains every few minutes at the subterranean station accessible by a two-track tunnel that connects to Downtown Dallas. Above the station, activity abounds at a Starbucks, a theatre, and a burst of chic shops.

The successful development of the property altered DART’s stance on being a player in mixed-use developments.

“It’s really one of the first that made national notoriety, but there had been other things that were done,” McKay said. “This was a developer who stepped out and said that he had an idea and went for it. At the time, I think the Board of Directors said that’s not our core business, so let’s not wade off into that too much.”

It’s a different mind-set now.

“Until fairly recently, if we didn’t have use for a property, we’d sell it,” added McKay, who says the agency is willing to hold onto to land for future development. “Now we have a transit-oriented development policy that talks to long-term leases that are leveraging assets that the agency has accumulated or will accumulate.”

DART has become an integral part of residential development in other areas of downtown and even in the suburbs. Similar ideas are on view in Houston and Austin.

A new Greystar development designed by Meeks + Partners will be accessible via Houston METRO’s proposed Uptown Line extension on the MetroRail. The 400-unit property graces a choice five-acre tract near the Galleria and four major roadways with access to shopping and restaurants. Some of the units will be ready for occupancy this fall.

Meeks + Partners CEO Don Meeks told Multi-Housing News in March that the Avenue R location will mean easy access to everything in the Uptown District plus proximity to Highway 59, Interstate 610, the Westpark Tollway and Interstate 10. The Uptown Line expansion, which is still in development, will provide residents a transportation alternative.

Austin’s two-year-old MetroRail is an urban renewal focal point for the Airport Boulevard Corridor, which stretches from Lamar Boulevard to Interstate 35. The city hired Gateway Planning to create a vibrant, pedestrian-friendly mix of retail and residential.

Gateway Planning President Scott Polikov told the Austin American Statesman that the redevelopment could utilize existing features like the rail line to reinvent a dilapidated area with its aging mall, strip centers and car repair shops.

A 79-page public review released in October depicts a blend of high-rise and two- and three-story residential and retail development within walking distance of a MetroRail station. Gateway Planning is even implementing a form-based code to revitalize the corridor. Polikov envisions investors creating a desirable setting right around the corner from the train.

Back in Dallas, DART hopes to influence a younger generation that desires high-density, high-rise living over traditional apartments on sprawling properties in the suburbs and doesn’t get behind the wheel as much.

Recent data suggests that fewer young Americans are driving less and that urban centers in suburbans are dwindling. According to the U.S. Census, metropolitan areas – including Dallas/Fort Worth, Houston/Sugar Land/Baytown and Washington D.C./Arlington/Alexandria – experienced population growth from April 1, 2010 to July 1, 2011. Also, the Associated Press recently reported on a study at the University of Michigan Transportation Research Institute April that the number of driver’s licenses issued to people in their teens, 20s and 30s has dropped in the last 30 years.

“We’re starting to see a renaissance in the area where some of the younger professionals would rather not drive as much and want to get to where they’re going on the light rail system,” McKay said. “It’s generational, and a lot of the younger generation likes the live-work-play destination.”

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Tim Blackwell is a long-time publishing and printing executive in the Dallas/Fort Worth area who writes about the multifamily housing and transportation industries. He has contributed numerous articles to Property Management Insider, and worked as a newspaper reporter in the D/FW area. Blackwell is president of Ballpark Impressions, and publishes the Cowcatcher Magazine. He is a member of the Fort Worth Chapter/Society of Professional Journalists.